Accounting Quiz

Which method of inventory valuation results in the highest net income during a period of rising prices?

• FIFO

• LIFO

• Weighted Average

• Specific Identification

If a company's current ratio is less than 1, what does that suggest?

• The company has more assets than liabilities

• The company may have liquidity problems

• The company is highly profitable

• The company has too much retained earnings

Which adjustment is necessary if a company earns revenue in December but doesn't bill the customer until January?

• Accrued Revenue

• Deferred Revenue

• Prepaid Revenue

• Unearned Revenue

Which of the following costs would most likely be classified as manufacturing overhead (MOH) in a factory?

• Direct materials used in production

• Wages of assembly line workers

• Factory Manager salary

• Sales commissions for the marketing team

If a company overstates ending inventory, what is the effect on net income?

• Understated

• Overstated

• No effect

• Depends on the cash flow

If a company accidentally expensed a $100,000 purchase of machinery instead of capitalizing it, what is the immediate effect on financial statements?

• Overstated assets and understated expenses

• Understated assets and overstated expenses

• No impact

• Overstated liabilities

Which of the following is Step 2 in the IFRS 15 five-step revenue recognition model?

• Identify the performance obligations in the contract

• Determine the transaction price

• Recognize revenue when (or as) the entity satisfies a performance obligation

• Identify the contract with a customer

When a company enters into a lease that is classified as a finance lease, what amount should be initially recognized in the journal entry for the leased asset and lease liability?

• The total lease payments over the lease term

• The fair value of the leased asset

• The present value of lease payments to be made over the lease term

• The residual value of the leased asset

Which of the following is NOT a real accounting term?

• FIFO

• LIFO

• YOLO

• Accrual

What does an accountant dream about at night?

• Unlimited coffee

• A perfectly balanced trial balance

• Free Wi-Fi

• Free Donuts